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Home My WebLink AboutCO 237 A• 9 Image Project Order File Cover Page XHVZE This page identifies those items that were not scanned during the initial production scanning phase.. They are available in the original file, may be scanned during a special rescan activity or are viewable by direct inspection of the file. Cc) 23`t Organizing (done) RESCAN ❑ Color Items: ❑ Greyscale Items: ❑ Poor Quality Originals: Order File Identifier R Two-sided DIGITAL DATA ❑ Diskettes, No. ❑ Other, No/Type: o Re,canNreded 1111111111111111111 OVERSIZED (Scannable) ❑ Maps: ❑ Other Items Scannable by a Large Scanner OVERSIZED (Non -Scannable) ❑ Other: ❑ Logs of various kinds: NOTES:Other:: � 4"', � �e\�.�? BY: Angela ✓ Date: -T N ('LcA 4, /s/ - Proorin IIIIIIIIIIIIII IIIII Project g BY: Angela ✓ Date: '-t.% ` (2c,\`-1 /s/ Scanning Preparation x 30 = + = TOTAL PAGES 2 � (Count does not include cover sheet) BY: Angela ✓ Date:--xf\I2o t', /s/ - n Scanning III IIIIIIIIIII IIIII Production g Stage 1 Page Count from Scanned File: 222 (Count does include cover sheet) Page Count Matches Number in Scanning Preparation: ✓ YES NO BY: Angela ✓ Date: '-t / \ I Z-�'\ ` /s/ Stage 1 If NO in stage 1, page(s) discrepancies were found: YES NO BY: Angela Date: /s/ unless rescannin is required. 1111111111111111111 Scanning is complete at this point 9 ReScanned III IIIIIIIIIII IIIII BY: Angela Date: /s/ ualit IIIII'IIIIIIII'III) Comments about this file: Q yChecked INDEX CONSERVATION ORDER NO. 237A Beaver Creek Field Beaver Creek Unit Sterling Gas Pool Beluga Gas Pool 1. April 3, 2014 Hilcorp Alaska, LLC's (HAK) request for administrative approval to amend Rule 2 (Pool Definition) to adjust the vertical depths of the Sterling Gas and Beluga Gas Pools to include all sands associated with each geologic formation, (confidential Exhibits A and B and Figures A3, A4, A5, and A6 held in secure storage) 2. May 28, 2014 (Confidential Beaver Creek Field exhibit held in secure storage) • • STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue, Suite 100 Anchorage Alaska 99501 Re: THE APPLICATION OF Hilcorp Alaska, LLC to amend Conservation Order 237 to remove interwell spacing requirements contained in Rule 3(a) for the gas pools in the Beaver Creek Field. IT APPEARING THAT: Docket Number: CO-14-008 Conservation Order No. 237A Beaver Creek Field Beaver Creek Unit Sterling Gas Pool Beluga Gas Pool Kenai Peninsula Borough, Alaska June 18, 2014 1. By letter dated and received April 3, 2014, Hilcorp Alaska, LLC (Hilcorp) requested the Alaska Oil and Gas Conservation Commission (AOGCC) amend Rule 3(a) of Conservation Order No. 237 (CO 237) to eliminate the interwell spacing requirements for the Sterling Gas Pool and Beluga Gas Pool. 2. Pursuant to 20 AAC 25.540, the Alaska Oil and Gas Conservation Commission (AOGCC) tentatively scheduled a public hearing for May 29, 2014. On April 15, 2014, the AOGCC published notice of the opportunity for that hearing on the State of Alaska's Online Public Notice website and on the AOGCC's website, electronically transmitted the notice to all persons on the AOGCC's email distribution list, and mailed printed copies of the notice to all persons on the AOGCC's mailing distribution list. On April 14, 2014, the notice was published in the ANCHORAGE DAILY NEWS. 3. No protest to the application or request for hearing was received. 4. On May 22, 2014, the tentatively scheduled hearing was vacated. 5. Because Hilcorp provided sufficient information upon which to make an informed decision, the request can be resolved without a hearing. FINDINGS: 1. Hilcorp is the owner and operator of the Beaver Creek Field, the Beaver Creek Unit, which are located in the Kenai Peninsula Borough, Alaska. 2. Rule 3(a) of CO 237 establishes 160-acre well spacing requirements and a minimum distance of 1,320 feet from the nearest open wellbore in the same pool for gas wells completed in the Sterling and Beluga Gas Pools. 3. The existing spacing requirements were established in 1988 based on available geological and reservoir information. Conservation Order 237A • • June 18, 2014 Page 2 of 4 4. The previous operator of the field, Marathon Oil Corporation, drilled ten additional wells in the Beaver Creek Unit after the pool rules were established and obtained a better understanding of the Sterling and Beluga Gas Pools. 5. As is common in the Cook Inlet Basin the gas pools in the Beaver Creek Unit (BCU) are comprised of discontinuous sand lenses that were deposited in a braided to meandering stream environment and thus there is little lateral continuity between individual sands within the defined gas pools. CONCLUSIONS: 1. Information gathered since 1988 demonstrates that the existing well spacing requirements for the Sterling and Beluga Gas Pools prevent efficient development of the BCU. 2. Retaining the requirement that wells may not be opened within 1,500 feet of the unit boundary will protect the correlative rights of offset owners and landowners. NOW THEREFORE IT IS ORDERED: Conservation Order 237 and all of its administrative approvals are hereby revoked and their administrative records incorporated by reference into this order. Development of the Beaver Creek Unit is subject to the statewide requirements of 20 AAC 25 to the extent not superseded by the following rules: Affected Area: Seward Meridian (Source: CO 237) Township, Range Description T6N, R10W Section 3: NE/4, WV2 , WI/2SE1/4 Section 4: All Section 5: EI/2NE1/4, SEI/4 Section 8: NE'/4 Section 9: NEI/4NE1/4, WI/2NEI/4, NWI/4 Section 10: NI/2NWI/4 T7N, R10W Section 26: SWI/4NWI/4 , WI/2SWI/4, SEI/4SWI/4 Section 27: All Section 28: NEI/4NEI/4, SI/2NE1/4, SEI/4NWI/4, SWI/4, SEI/4 Section 32: EI/2E%2 Section 33 & 34: All Section 35: NW/4, WI/2SWI/4, NEI/4SWI/4 Conservation Order 237A • June 18, 2014 Page 3 of 4 Rule 1 Field Name (Source: CO 237) The Field is named the Beaver Creek Field. Rule 2 Pool Definition (Source: CO 237 and Revised CO 237.002) (a) The Sterling Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation present in the Beaver Creek Unit Well No. lA between the measured depths of 5188 and 6370 feet. (b) The Beluga Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation present in the Beaver Creek Unit Well No. I between the measured depths of 6,370 and 9,650 feet. (c) The Beaver Creek Oil Pool is defined as the accumulation of oil that is common to and correlates with the accumulation present in the Beaver Creek Unit Well No. 4 between the measured depths of 14,518 and 15,874 feet. Rule 3 Well Spacing (Source: CO 237 and Revised This Order) (a) There shall be no restrictions as to gas well spacing in the Sterling and Beluga Gas Pools except that no pay shall be opened in a well within 1,500 feet from the exterior boundary of the Beaver Creek Unit where owners and landowners are not the same on both sides of the line. (b) Well spacing in the Beaver Creek Oil Pool shall be 40 acres. No wellbore may be opened nearer than 660 feet from the nearest open wellbore in the same pool. No wellbore may be opened nearer than 500 feet from the exterior boundary of the Beaver Creek Unit where owners and landowners are not the same on both sides of the line. Rule 4 Administrative Action (Source: CO 237) Upon written application, the Commission may administratively amend this order. The operator must demonstrate to the Commission that sound engineering practices are maintained and the amendment will prevent waste and protect correlative rights. Conservation Order 237A June 18, 2014 Page 4 of 4 DONE at Anchorage, Alaska and dated June 18, 2014. Cathy . F erster1� Daniel. Seamount, Jr. apt: Chad, Commissioner Commissioner RECONSIDERATION AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10-days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 mm. on the next day that does not fall on a weekend or state holiday. • • Singh, Angela K (DOA) From: Carlisle, Samantha J (DOA) Sent: Wednesday, June 18, 201410:25 AM To: Ballantine, Tab A (LAW); Bender, Makana K (DOA); Bettis, Patricia K (DOA); Brooks, Phoebe L (DOA); Carlisle, Samantha J (DOA); Colombie, Jody J (DOA); Crisp, John H (DOA); Davies, Stephen F (DOA); Eaton, Loraine E (DOA); Ferguson, Victoria L (DOA); Foerster, Catherine P (DOA); Frystacky, Michal (DOA); Grimaldi, Louis R (DOA); Guhl, Meredith D (DOA); Hill, Johnnie W (DOA); Hunt, Jennifer L (DOA); Jackson, Jasper C (DOA); Jones, Jeffery B (DOA); Kair, Michael N (DOA); Mumm, Joseph (DOA sponsored); Noble, Robert C (DOA); Paladijczuk, Tracie L (DOA); Pasqual, Maria (DOA); Regg, James B (DOA); Roby, David S (DOA); Scheve, Charles M (DOA); Schwartz, Guy L (DOA); Seamount, Dan T (DOA); Singh, Angela K (DOA); Wallace, Chris D (DOA); (michael j.nelson@conocophillips.com); AKDCWellIntegrityCoordinator, Alexander Bridge; Andrew VanderJack, Anna Raff; Barbara F Fullmer, bbritch; bbohrer@ap.org; Barron, William C (DNR); Bill Penrose; Bill Walker, Bob Shavelson; Brian Havelock; Burdick, John D (DNR); Cliff Posey, Colleen Miller, Crandall, Krissell; D Lawrence; Daryl J. Kleppin; Dave Harbour, Dave Matthews; David Boelens; David Duffy, David Goade; David House; David McCaleb; David Scott; David Steingreaber; David Tetta; Davide Simeone; ddonkel@cfl.rr.com; Donna Ambruz; Dowdy, Alicia G (DNR); Dudley Platt; Ed Jones; Elowe, Kristin; Evans, John R (LDZX); Francis S. Sommer, Frank Molli; Gary Schultz (gary.schultz@alaska.gov); George Pollock; ghammons; Gordon Pospisil; Gorney, David L.; Greg Duggin; Gregg Nady; gspfoff, Jacki Rose; Jdarlington oarlington@gmail.com); Jeanne McPherren; Jerry McCutcheon; Jim White; Joe Lastufka; news@radiokenai.com; Easton, John R (DNR); John Garing; Jon Goltz, Jones, Jeffrey L (GOV); Juanita Lovett, Judy Stanek; Houle, Julie (DNR); Julie Little; Kari Moriarty, Keith Wiles; Kelly Sperback; Klippmann; Gregersen, Laura S (DNR); Leslie Smith; Lisa Parker, Louisiana Cutler, Luke Keller, Marc Kovak; Dalton, Mark (DOT sponsored); Mark Hanley (mark.hanley@anadarko.com); Mark P. Worcester, Mark Wedman; Kremer, Marguerite C (DNR); Michael Jacobs; Michael Moora; Mike Bill; mike@kbbi.org; Mikel Schultz; Mindy Lewis; MJ Loveland; mjnelson; mkm7200; Morones, Mark P (DNR); knelson@petroleumnews.com; Nick W. Glover, Nikki Martin; NSK Problem Well Supv; Oliver Sternicki; Patty Alfaro; Decker, Paul L (DNR); Paul Mazzolini; Pike, Kevin W (DNR); Randall Kanady; Randy L. Skillern; Randy Redmond; Rena Delbridge; Renan Yanish; Robert Brelsford; Ryan Tunseth; Sandra Haggard; Sara Leverette; Scott Griffith; Shannon Donnelly; Sharmaine Copeland; Sharon Yarawsky, Shellenbaum, Diane P (DNR); Slemons, Jonne D (DNR); Smart Energy Universe; Smith, Kyle S (DNR); Sondra Stewman; Stephanie Klemmer; Steve Kiorpes; Moothart, Steve R (DNR); Steven R. Rossberg; Suzanne Gibson; sheffield@aoga.org; Tania Ramos; Ted Kramer, Davidson, Temple (DNR); Terence Dalton; Teresa Imm; Thor Cutler, Tim Mayers; Tina Grovier, Todd Durkee; Tony Hopfinger, trmjrl; Tyler Senden; Vicki Irwin; Vinnie Catalano; Walter Featherly; yjrosen@ak.net; Aaron Gluzman; Aaron Sorrell; Ajibola Adeyeye; Alan Dennis; Andrew Cater, Anne Hillman; Bruce Williams; Bruno, Jeff J (DNR); Casey Sullivan; David Lenig; Donna Vukich; Eric Lidji; Erik Opstad; Gary Orr, Smith, Graham O (PCO); Greg Mattson; Hans Schlegel; Heusser, Heather A (DNR); Holly Pearen; James Rodgers; Jason Bergerson; Jennifer Starck; jill.a.mcleod@conocophillips.com; Jim Magill; Joe Longo; John Martineck; Josh Kindred; Kenneth Luckey; King, Kathleen J (DNR); Laney Vazquez; Lois Epstein; Longan, Sara W (DNR); Marc Kuck, Marcia Hobson; Steele, Marie C (DNR); Matt Armstrong; Matt Gill; Franger, James M (DNR); Morgan, Kirk A (DNR); Pat Galvin; Peter Contreras; Richard Garrard; Richard Nehring; Robert Province; Ryan Daniel; Sandra Lemke; Pexton, Scott R (DNR); Peterson, Shaun (DNR); Pollard, Susan R (LAW); Talib Syed; Terence Dalton; Todd, Richard J (LAW); Tostevin, Breck C (LAW); Wayne Wooster; To: Woolf Wendy C (DNR); William Hutto; William Van'Dyke Subject: Conservation Order 237A (Beaver Creek Field) Attachments: co237a.pdf Please see attached. Samantha CarlisCe Executive Secretary II Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 (907) 793-1223 (phone) (907) 276-7542 (fax) CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact Samantha Carlisle at (907) 793-1223 or Samantha.Carlisle@alaska.gov. Penny Vadla Jack Hakkila 399 W. Riverview Ave. Post Office Box 190083 Soldotna, AK 99669-7714 Anchorage, AK 99519 James Gibbs Bernie Kart George Vaught, Jr. K&K Recycling Inc. Post Office Box 1597 55 580 Post Office Box Post Office Box 13557 Soldotna, AK 99669 Fairbanks, AK 580 Denver, CO 80201-3557 Gordon Severson Richard Wagner CIRI 3201 Westmar Cir. Post Office Box 60868 Land Department Anchorage, AK 99508-4336 Fairbanks, AK 99706 Post Office Box 93330 Anchorage, AK 99503 David W. Duffy Jerry Hodgden Landman Darwin Waldsmith Hodgden Oil Company Hilcorp Alaska, LLC Post Office Box 39309 408 S t. Post Office Box 244027 Ninilchik, AK 99639 Golden, CO 80401-2433 Golden, Anchorage, AK 99524-4027 North Slope Borough Planning Department Post Office Box 69 Barrow, AK 99723 #2 • • Confidential Beaver Creek Field exhibit held in secure storage #1 • Hilcorp Alaska, LLC April 3, 2014 Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 1400 Anchorage, AK 99503 Phone:907/777-8414 Fax:907/777-8301 Email: dduffv@hilcori).com Cathy Foerster, Chair Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 APR 013 2014 Anchorage, Alaska 99501 AOGGG RE: Proposal to amend Conservation Order 237 to redefine the measured depths of the Beluga Pool and to eliminate gas well spacing restrictions within 1500' of the Beaver Creek Unit boundary. Dear Commissioner Foerster, Hilcorp Alaska, LLC ("Hilcorp"), as Operator of the Beaver Creek Field, respectfully requests the Alaska Oil and Gas Conservation Commission ("AOGCC") take administrative action to amend Rule 2 (Pool Definition) to adjust the vertical depths of the Sterling Gas and Beluga Gas Pools to include all sands associated with each geologic formation.' The language proposed by Hilcorp states: Rule 2 Pool Definition (a) [no change] (b) The Beluga Gas Pool is defined as the accumulation of gas that is common to and correlates with the accumulation present in the Beaver Creek Unit well No. 1A between the measured depths of 74A 6,370 and 9,650 feet. (c) [no change] In addition, Hilcorp request the AOGCC to take administrative action to repeal Rule 3(a) in its entirety and replace it with the following language: Rule 3 Well Spacing: a) There shall be no restrictions as to gas well spacing except that no pay shall be opened in a well within 1500 feet from the exterior ' Conservation Order 237, Rule 4 states: "Upon written application, the Commission may administratively amend this order. The operator must demonstrate to the Commission that sound engineering practices are maintained and the amendment will prevent waste and protect correlative rights." Hilcorp Alaska, LLC 0 Proposal to Amend Conservation Order 237 April 3, 2014 Page 2 of 12 boundary of the Beaver Creek Unit where owners and landowners are not the same on both sides of the line. b) [No change] DISCUSSION The Beaver Creek Field is located in the Kenai National Wildlife Refuge approximately 11 miles northeast of Kenai, Alaska. Following unit formation in 1967, initial development resulted in the production of gas from both the Sterling and upper Tyonek Formation and oil from the Lower Tyonek formation. In 1988, the AOGCC first established pool rules for Beaver Creek Unit. Since that time, Conservation Order 237 has not been updated or amended. Confidential geologic and engineering reports have been prepared to support Hilcorp's application for the proposed administrative action. See Exhibits A (Geologic Report) and Exhibit B (Engineering Report). Hilcorp's proposed rules are designed to prevent waste, protect correlative rights and improve the ultimate recovery of remaining hydrocarbons throughout the Beaver Creek field. They are also designed to reduce the administrative burdens on both Hilcorp and AOGCC staff. There are currently 16 wells in the Beaver Creek Unit, 6 of which are producing. During the month of January 2014, these wells collectively produced 4,732 barrels of oil and 175,195 MCF gas. By comparison, Beaver Creek Field production peaked in December 1985 (10,067 barrels of oil and 1,588,869 MCF gas) from only 6 wells. Hilcorp purchased these legacy assets with the intent to maximize the recovery of remaining hydrocarbons. This requires implementation of a comprehensive capital workover program designed to: • repair broken wells • return shut in production wells to service • optimize existing well completions • increase water injection and reservoir throughput, • pursue stimulation opportunities, and • identify, then execute new drilling projects During 2014, Hilcorp anticipates performing of approximately 4 rig workovers and 6 new drill/sidetrack projects within the Beaver Creek Field, each targeting increased oil and gas production. Going forward, Hilcorp's recompletion, workover and drilling Hilcorp Alaska, LLC 0 Proposal to Amend Conservation Order 237 April 3, 2014 Page 3 of 12 program will be similar in 2014-2016. Within the next few years, Hilcorp estimates that it will undertake up to 6 workovers and 8 new drill/sidetrack projects within the Beaver Creek Unit. Hilcorp cannot efficiently produce remaining reserves under current well spacing rules. While existing rules and procedures may have adequately protected correlative rights and prevented waste during the field's initial development, they are not applicable to the enhanced recovery effort necessary to produce remaining hydrocarbon reserves at the Beaver Creek Unit. As discussed above, Hilcorp, as Operator, is the sole working interest owner of the Beaver Creek Field. There are four leases within the Beaver Creek Unit (total of 3680 acres), each of which is jointly owned by the Federal Government and Cook Inlet Region, Inc. The purpose of proposed vertical adjustment of existing Sterling and Beluga Pools is self-evident. The goal is simply to include all potentially gas -bearing sands required to extend this aging field's capacity to produce in a manner that is technically sound, yet administratively efficient In the absence of competing working interests, gas well spacing and density rules are no longer to necessary to prevent waste or protect correlative rights. Adjoining owners, operators and landowners will be adequately protected by the proposed 1500' buffer from the unit boundary boarder. In addition to reducing administrative burdens, the proposed order is designed to prevent economic and physical waste and improve the ultimate recovery of remaining hydrocarbons. By eliminating intra-pool gas well spacing rules, and including all sands associated with the Sterling and Beluga Gas Pools, Hilcorp will be able to target smaller, un-drained portions of isolated areas that cannot be reached by wells conforming to current spacing restrictions. Elimination of all spacing requirements will also help maximize recovery from bypassed pay while allowing for continued production from established development wells. Hilcorp would be pleased to schedule a technical meeting with AOGCC staff to provide additional information in support of this proposal. Should you have any other questions regarding this proposal, please do not hesitate to contact the undersigned at 777-8341. 0 Hilcorp Alaska, LLC Proposal to Amend Conservation Order 237 April 3, 2014 Page 4 of 12 Sincerely, David W. Duffy, Landman Hilcorp Alaska, LLC Enclosures: CONFIDENTIAL 0 • Exhibit A: Geologic Report in Support of Proposal to Amend Beaver Creek Field's Beluga Pool Definition • Exhibit B: Engineering Report in Support of Proposal to Eliminate Gas Well Spacing Restrictions at Beaver Creek Field cc: Bureau of Land Management, Cook Inlet Region, Inc. • Confidential Exhibit A held in secure storage • 0 Confidential Exhibit B held in secure storage • 1-1 Confidential Figure A3 held in secure storage 9 Confidential Figure A4 held in secure storage • Confidential Figure A5 held in secure storage • • Confidential Figure A6 held in secure storage